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Vol. 38 (Nº 47) Year 2017. Page 41

Problems of property marketdevelopment in Russia in the moderncontextProblemas de desarrollo del mercado inmobiliario en Rusia en elcontexto modernoJuliya Sergeevna TSERTSEIL 1 Viktoriya Vladimirovna KOOKUEVA 2

Received: 03/10/2017 • Approved: 06/10/2017

Content1. Introduction2. Literature review3. Method4. Results5. ConclusionAcknowledgementBibliographic references

ABSTRACT:This paper analyzes the development prospects of theproperty market and discusses its current state inRussia. The study identifies the main problems andfactors affecting the development of the Russianhousing market. It is shown that the key problems ofthe Russian housing market are the low effectivedemand and income level of the population, a high levelof interest rates, the low consumer satisfaction withrespect to the volume of housing construction in certainregions, particularly in rural areas, the lack of borrowedand attracted financial resources and other factors. Thepaper gives a review of the main development trends ofthe property market in Russia and presents acomparative analysis of its development trends in othercountries. Keywords Housing market, housing (mortgage)lending market, per capita income, housing stock.

RESUMEN:En este trabajo se analizan las perspectivas dedesarrollo del mercado inmobiliario y se discute suestado actual en Rusia. El estudio identifica losprincipales problemas y factores que afectan eldesarrollo del mercado inmobiliario ruso. Se demuestraque los problemas clave del mercado inmobiliario rusoson la baja demanda efectiva y el nivel de ingresos dela población, un alto nivel de tasas de interés, la bajasatisfacción del consumidor con respecto al volumen deconstrucción de viviendas en ciertas regiones,particularmente en las zonas rurales, la falta derecursos financieros prestados y atraídos y otrosfactores. El documento da una revisión de lasprincipales tendencias de desarrollo del mercadoinmobiliario en Rusia y presenta un análisis comparativode sus tendencias de desarrollo en otros países. Palabras clave Mercado de la vivienda, mercado depréstamos de vivienda (hipoteca), renta per cápita,stock de vivienda.

1. IntroductionThe property market plays an important role for any state and its population. An important taskfor the state is not only the development of the property market in the whole country, but alsothe promotion of housing affordability for citizens through various tools for housing marketfinancing. In recent years, the property market has experienced various conditions, including asharp jump before the crisis and a fall after the crisis. All this confirms the need for statesupport to develop the property market, which will contribute to the solution of many socialproblems and the development of the economy as a whole. On the one hand, the propertymarket is sensitive to the changes in interest rates.The key problems of the housing market include the insufficient effective demand and the lowper capita income of the population in need of housing, high loan interest rates, uncoordinatedrelations between executive authorities and developers, insufficient volumes of housingconstruction in certain regions, particularly in rural areas, a deficit in borrowed and attractedfinancial resources and other factors.The purpose of this study is to review the main trends in the development of the propertymarket in Russia, make a comparison with its development trends in other countries, as well asidentify the main problems and influencing factors in this area.

2. Literature reviewWith regard to the theoretical foundations of the essence of the housing market and itsdevelopment models, a large number of studies are devoted to determining the role ofmortgage housing lending in the development of the property market as well as the models andforms of housing financing. A significant contribution to the development of theoretical andmethodological issues in the analysis of the residential property market and the main directionsof its development was made by A.N. Asaul, V.V. Buzyrev, A.I. Vakhmistrov, S.A. Ershova, V.A.Zarenkov, L.M. Kaplan, A.N. Larionov, Yu.P. Panibratov, N.I. Pasyada, A.S. Robotov, E.B.Smirnov, R.A. Faltinsky, L.I. Tsapu, V.A. Yakovlev and a number of other researchers. Certainaspects of the mortgage lending process were considered in the works of such scholars as T.A.Akulova, L.Yu. Andreeva, A.V. Krysin, A.A. Lupar, E.S. Maltseva, I.V. Pavlova, E.A. Rusetskaya,L.I. Ryabchenko, V.A. Savinova, E.N. Sokolovskaya, E.S. Tkacheva, A.D. Yushkantsev, Yu.S.Berestova, Т.V. Volodina, G.A. Grabsky, E.A. Zakharov, M.P. Loginov, O.N. Loginova, I.V.Dovdienko, L.Yu. Grudtsyna, S.V. Pechatnikova, I.V. Zhigunov, A.S. Kudeev, V.V. Klevtsov, Yu.A.Timagina, A.V. Falkovsky, A.I. Shakiryanova.Modern problems of mortgage housing lending were analyzed by such foreign researchers asM. Halter, E. Davidson, E. Sanders, L. Wolf, S. Dobson, J. Dolan, R.J. Strike, R. Dornbusch, S.Fisher, K. Campbell, D. Lindsay, S. Polfreman and others.A form (model) of housing financing is understood as the totality of organizational, functional,legal and financial-economic mechanisms operating in a single system according to a certainpattern of relationships between subjects of the housing market.The following forms of housing financing are distinguished by economists:

financing of housing acquisition;financing of housing construction, including state (municipal) rental housing;state support in providing housing for families with low incomes.

Studying the experience of housing construction financing with the help of lending allows allforms to be structured into models, according to the used refinancing mechanism within themand financing sources:- shared construction and housing installment sale;- provision of loans and credits for housing acquisition for employees by enterprises;- housing certificates;

- municipal housing bonds;- regional schemes (programs) using resources of regional and local budgets;- bank crediting;- savings scheme and experience of consumer unions;- a classical two-level model (developed in Moscow and St. Petersburg).Each case has its problems, advantages and disadvantages. In terms of equity participation,the problems are the risks of non-completion of construction, the existence of high effectivedemand, the need to attract credit resources, the inaccessibility for the population with lowincomes, and the low level of insurance protection.Regional programs using budgetary funds are implemented only in the regions whose budgethas sufficient financial resources. The advantage is the availability of state guarantees for low-income families, their reliability, and the disadvantage is the limitation in terms of financing.The housing financing mechanism has not been widespread in Russia.Consumer lending is possible in profitable and financially sustainable companies that havesufficient resources for this activity and are ready to provide their employees with suchopportunities. This option is not of a mass nature.Banking mortgage should be one of the most important and massive ways to develop theresidential property market. However, in Russia, despite some decline, interest rates are ratherhigh, which does not allow the development of this type of lending. The constraints to thedevelopment of this model are lending conditions that are inaccessible to the majority of thepopulation – the amount of down payment and monthly payments on the loan, depending onthe monthly income.The loan and savings model is not widely spread due to the lack of confidence in savings andloan funds, high inflation, the lack of state support and state guarantees.A classical two-level model can only develop in large cities, where the incomes of the populationare relatively high.Despite the fact that currently the mortgage lending system occupies an insignificant share inthe total volume of housing construction financing, with regard to foreign experience, it is themost progressive one. The insufficiency of its wide application in Russia is caused by a numberof reasons: the insignificant growth of housing construction, rather tough conditions ofmortgage lending, and the instability of the socioeconomic situation in the country.Let us consider some models of property market development in foreign countries.Reed and Wu (2010) consider the model of property market development in terms of theprinciple of cyclicity and risk factor, based on the work of Barras (1994), which is shown inTable 1.

Table 1. How the building cycle works

Real economy Property economy Money economy

Economic up-turn Credit expansion

Increased property demand

Supply shortage

Rising rents/falling yields

Economic boom Building boom Credit boom

Economic down-turn Increased supply

+ slackening demand

Rising interest rate

Falling rents/rising yields

Recession Property slump Credit squeeze

Source: https://dro.deakin.edu.au/eserv/DU:30024131/reed-understandingproperty-post-2010.pdf

Hornstein (2009) examines the impact of innovative methods of financing the mortgageproperty market, the development of which directly and indirectly affects the growth of thecountry's gross domestic product (GDP). In this case, it is emphasized that increasing theincomes of the population requires not expanding the range of innovative financial services, butincreasing the return on investment in real estate in the future.The features of a real estate investment financial analysis were reviewed by Poorvu (2003). Heoutlines the following assumptions that complicate the process of conducting a financialanalysis with respect to a real estate investment: the extremely long time horizon involved, theeffects of an ever-changing environment, and liquidity problems. In this connection, thefollowing components of an analysis are distinguished:- cash flow,- tax effect,- future benefits.Lin (2012) built the dependence of the main participants of the property market on the keyparameters, as reflected in Table 2 and Table 3.

Table 2. Variables and ratios for property market analysis

Market Housing Industrial Office Retail

Variable and ratio

Variable

Money supply + + + +

Interest rate + + + +

GDP + + + +

Housing starts (for residential) +

Number of days on market +

Number of unsold homes in a city +

Number of homes on market over 120days

+

Number of mortgage applications +

Population growth +

Household formations +

Cost of renting housing +

Industrial production +

Manufacturing employment +

Transportation employment +

Airfreight volume +

Rail and truck volume +

Retail sales + +

New office construction (for office) +

White collar employment +

Inflation expectation +

Car registrations +

Retail sector expenditure +

Aggregate household wealth +

Ratio

Affordability (household income to price) +

House price to employee compensation +

Asking price to transaction price +

% of properties bought for investment +

Industrial capacity utilization +

Vacancy rates + + +

Cap rates to interest rates + + +

Rental cost to mortgage costs + + +

Source: https://eres.architexturez.net/system/files/pdf/eres2012_355.content.pdf

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Table 3. A comparative framework for commercial and residential markets by property market data and information

Property market information

Location/leveldata

User-occupier Development – land market

Internationallevel

User cost ratio New order Newoutput

New buildingsold/newbuilding built

National level Rent Interest/deposit Servicecharge

Developer as an occupier (number,space m^2, value)

Regional level Maintenance cost Tax(counciltax)

Price elasticity of supply

Sub-regionallevel

Owner-investor Development cost structure analysis

Corporate level Owner – investor market ratio Propertyprice

Construction cost

Price Rent /cost Stockvolumeand value

Land price Developers profit

Physicalcharacteristicsdata

Affordability (income price ratio) Land price vs.

Developer's total cost, constructioncost, sold price, developer' profit

Age Bubble (rent-price ratio, income yield) Developer analysis

Structure Transaction

Style Total volume Total value Companybackground

Performance

Type of use Exist stock % ofexistingstock

Capital, output Short termdebt / equity

Layout New output % of newoutput

Company age Long termdebt / equity

Size Total stock % of totalstock

Employee Long termdebt / fixasset

Height(floor)/density

Vacancy rate (by region and sectors) Revenue, profit Operationcost / equity

Environment SUPPORTING

Financial market

Interestrate

Exchange rate Return-risk Creditaffordability

Debt structure – creditcontrol

Source: https://eres.architexturez.net/system/files/pdf/eres2012_355.content.pdf

3. MethodConsider the main housing affordability indices in Russia. The housing price to income ratio iscalculated as the ratio of the average price of an apartment of 54 square meters in area to theaverage income of a family consisting of three persons per year. The value of this indexcorresponds to the number of years during which a family can save for an apartment, assumingthat the entire money income received will be deferred to purchase an apartment. In Figure 1and Figure 2 we observe a downward trend in this index, which indicates a certain increase inhousing affordability. It is also positive that the proportion of families with mortgage paymentsis growing. However, it should be noted that despite the growth, this level yet cannot be calledhigh.

Figure 1. The housing price to income ratio in Russia (the ratio of prices and revenues, years) (compiled by the authors)

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Figure 2. Share of families that afford house mortgage in Russia, % (compiled by the authors)

Table 4 presents the main indices that characterize the Russian property market. The dynamicsof many indices is unstable. For example, after the crisis of 2014, the number of mortgageloans issued as well as property rights of individuals for residential premises decreased. A sharpincrease in the rate of mortgage loans in 2015 had an adverse impact on the development ofthe residential property market in Russia.

Table 4. Main indices characterizing the Russian property market for the period of 2012-2016

Indices 2012 2013 2014 2015 2016

Average per capita money incomeof the population (per month),thousand rubles 23,2 25,9 27,8 30,5 30,7

Share of costs for propertyacquisition in the population’smoney expenditures, % 4,2 3,9 4,5 2,9 н/д

Housing fund, million m2 of thetotal area of residential premises 3349 3359 3473 3581 3663

Commissioning, million m2 of thetotal area of residential premises 65,7 70,5 84,2 85,3 80,2

Average size of apartments built,m2 of total area 78,4 75,8 74,9 71,4 68,7

Share of the volume of housingmortgage loans provided in GDP,% 1,54 1,91 2,23 1,4 1,71

Registered property rights ofindividuals for residentialpremises, units 8 729 967 9 768 589 9 696 212 9 069 938 8 374 828

Registered mortgages ofresidential premises, units 1 159 208 1 245 833 1 425 016 1 134 333 1 290 682

Number of housing mortgageloans provided, units 691 724 825 039 1 012 814 699 510 856 461

Average weighted rate, % 12,29% 12,56% 12,37% 13,44% 12,62%

Average price in the residentialproperty market for 1 m2 of totalarea, thousand rubles (primarymarket) 48,2 50,2 51,7 51,5 53,3

Source: Author’s own computations.

The search for dependencies between the average mortgage rate and other indices makes itpossible to conclude that the correlation between the mortgage rate and the share of costs forproperty acquisition is the strongest. It is interesting that the correlation between the size ofmortgage rates and the number of loans issued is weak, and the correlation between the rateand GDP, the total amount of housing stock is average (see Table 5).

Table 5. Correlation coefficients between the average weighted mortgage rate and other indices in Russia

Indices Average weighted mortgagerate

Correlation

Number of housing mortgage loansprovided, units

-0,4322 Reverse weak

Share of the volume of housing mortgageloans provided in GDP, %

-0,5841 Reverse average

Share of costs for property acquisition inthe population’s money expenditures, %

-0,9657 Reverse strong

Average per capita money income of thepopulation (per month), thousand rubles

0,6661 Direct average

Housing fund, million m2 of the total areaof residential premises

0,5327 Direct average

GDP, billion rubles 0,5516 Direct average

Source: Author’s own computations.

The search for dependencies between the volume of housing fund and other indices makes itpossible to conclude that the strongest correlation is between the average per capita moneyincome of the population, the volume of GDP and the average price. It is interesting that thenumber of mortgage loans provided has a small impact on the volume of housing stock, andthere is a correlation with the interest rate for a loan, but it is average (see Table 6).

Table 6. Correlation coefficients between the volume of housing fund and other indices in Russia

Indices Housing fund, million m2 of thetotal area of residential premises

Correlation

Average weighted mortgage rate 0,5327 Direct average

Average price in the residential propertymarket for 1 m2 of total area, thousandrubles (primary market)

0,8896 Direct strong

Registered mortgages of residentialpremises, units

0,1083 Direct weak

Number of housing mortgage loansprovided, units

0,1301 Direct weak

Share of costs for property acquisition inthe population’s money expenditures, %

-0,6520 Reverse average

Average per capita money income of thepopulation (per month), thousand rubles

0,9408 Direct strong

GDP, billion rubles 0,9679 Direct strong

Source: Author’s own computations.

As a result of the study it was revealed that the size of average per capita income is connectedto the volume of housing stock, and this relationship is described by the model:

y = 40,697x + 2361

R² = 0,8852

where x is the size of average per capita incomes of the population,

y is housing stock, million m2 of the total area of residential premises.

Figure 3. Correlation between the size of average per capita income and the volume of housing stock in Russia.

Source: Author’s own computations.

It was revealed that the average weighted mortgage rate is connected to the share of costs forproperty acquisition, and this relationship is described by the model:

y = -126,83x + 19,938

R² = 0,9327

Figure 4. Correlation between the average weighted mortgage rate and the share of costs for property acquisition in Russia.

Source: Author’s own computations.

The study showed that there was a correlation between the average monthly accrued wagesand the amount of early repaid mortgage loans, as can be seen in Figure 5.

Figure 5. Correlation between the index of the average monthly nominal accrued wages within a full range of organizations by entities of the Russian Federation, rubles (х) and the resulting index of the volume of early repaid

mortgage housing loans by borrowers in 30 largest banks (regional section) (y) as of January 1, 2017, million rubles.

Source: Author’s own computations.

The presented dependence is based on the official data of the Federal State Statistics Servicefor such federal districts as the Central Federal District (excluding the Belgorod and Bryanskregions), the Northwestern Federal District (excluding the Nenets Autonomous District), theSouthern Federal District, and the Volga Federal District. As can be seen, the growth of wagesstimulates the receipt of payments for the satisfaction of mortgage. It is of great importance inthis case to stimulate people's intentions to save and implement capital investments underconstantly changing economic conditions in the long term.

4. Results

4.1 Analysis of the structure and dynamics of property marketdevelopment in the UK (London) Property market development problems and trends as an object of investment from bothcommercial and private structures are considered by various analytical agencies in foreigncountries, which explore the experience of this market development in large cities such asLondon (UK) (Report, 2016). The value of commercial property in the UK in 2015 reached arecord level, with most of it –41% – being retail property, offices accounted for 31%, industrialproperty – 19%, as can be seen from Table 7 and Table 8.

Table 7. Owner-occupied and investedcommercial property in London, 2015

Indicators Pounds, BN % of total

1. Retail 360 41

Shopping centers 66 8

Retail warehouses 52 6

Other retail (including supermarkets) 243 28

2. Offices 270 31

London 173 20

South Eastern 32 4

Rest of UK 65 7

3. Industrial 169 19

London and South Eastern 67 8

Rest UK 102 12

4. Other commercial 73 8

Hotels 31 4

Leisure 17 2

Miscellaneous other commercial 24 3

5. Total commercial property 871 100

of which London 330 38

of which rest of UK 541 62

Source: http://www.bpf.org.uk/sites/default/files/resources/PIA-Property-Report-2016-final-for-web.pdf

Analysis of the commercial property market by investor type shows that the majority areoverseas investors – 28%, UK institutions – 17%, collective investors – 16%.

Table 8. Ownership of UK commercial property by investor type

Pounds, BN2015

% change

2005-2015

% of total

Overseas investors 135 125 28

UK institutions (insurance companies and pensionfunds)

84 - 10 17

UK collective investment schemes 79 64 16

UK REITS & listed prop companies 71 37 15

UK unlisted prop companies 59 -13 12

UK traditional estates/ charities 23 40 5

UK other 20 -8 4

UK private investors 13 19 3

Total value of buildings in investmentportfolios

483 31 100

Source: http://www.bpf.org.uk/sites/default/files/resources/PIA-Property-Report-2016-final-for-web.pdf)

The total cost of investment of insurance companies and pension funds in commercial propertyin 2015 was £178 billion (about 6%). Almost 3% of their total investments are directinvestments in state institutions.

Table 9. Insurance company and pension fund investment in commercial property in UK as & of total investments

2015

pounds BN

% of total

Total assets (equity, bonds, property, etc.) 3064 100

Directly – owned UK property 84 2.8

Investments in UK collective investment schemes (net assetvalue)

57 1.9

UK & overseas property company shares (marketcapitalization)

37 1.2

Total property 178 5.8

Lending against commercial investment property 26 0.8

Source: http://www.bpf.org.uk/sites/default/files/resources/PIA-Property-Report-2016-final-for-web.pdf

Housing is one of the key priorities of the UK government. For many people, the affordabilityand accessibility of housing has become increasingly difficult in recent years. As part of itshousing policy, the government has two goals: to stimulate housing for the next five years andto increase the proportion of its own housing (Boyd, 2014).The total amount of public housing costs in England was about £28 billion in 2015-16. “TheHome Building Fund is worth £3 billion up to 2020-21 and provides a mix of short- and long-term development and infrastructure loans. Of this funding £1 billion will be targeted at smalland custom builders, through which the government aims to complete 25,500 new homes by2020. The remaining £2 billion is designed to provide long-term funding for infrastructure”(https://www.nao.org.uk/wp-content/uploads/2017/01/Housing-in-England-overview.pdf).

4.2 Analysis of the structure and dynamics of property market

development in Finland The volume of property transactions remains high in 2017 in Finland. However, in the firstquarter of 2017, the average transaction amount was relatively low, leaving the total volumeclearly lower than in 2016. Strong investment demand has reduced the volume of profitability,which has reached record low levels.In recent years, the most active groups of investors in the market are companies and funds aswell as overseas investors. All these groups have increased their portfolios, both funds andoverseas players. As the total size of the market continued to grow, the share of institutionalinvestors in the overall market continued to decline.

Table 10. The structure of Finish property investment market by investor group. Direct property investments in Finland 2011-2015, EUR billion

2011 2012 2013 2014 2015

Institutional investors 15.4 16.2 16.2 16.0 15.6

International investors 9.0 9.0 9.3 9.8 11.9

Listed propertycompanies

5.2 5.4 5.6 5.6 5.8

Non-listed propertycompanies

6.5 7.6 8.4 9.9 11.1

Real estate funds 5.7 6.3 7.1 7.5 9.1

Charities, endowmentsand other

1 1 1 1 1

Source: https://kti.fi/wp-content/uploads/The-Finnish-Property-Market-2016.pdf

As can be seen from Table 11, the share of direct domestic investments in real estate is 72.1%,indirect domestic investments – 13.5%, and the share of all foreign investments – 14.4%.

Table 11. Real estate exposure of Finish institutions in 2015, %

Direct domesticinvestments

Indirect domesticinvestments

Direct foreigninvestments

Indirect foreigninvestments

2015 72.1 13.5 2.1 12.3

Source: https://kti.fi/wp-content/uploads/The-Finnish-Property-Market-2016.pdf

The total investment of these groups of investors in the Finish property market amounted to€21.6 billion in 2015.The structure of the Finish property market in 2016 is reflected in Table 6, where it can be seenthat most of it is occupied by office property is 29.2%, residential property – 28.6%, and retailproperty – 25.9%.

Table 12. The structure of Finish property investment market by sector in 2015, %(the total size of EUR 54.5 billion)

Office Retail Industrial Residential Hotel Other

2015 29.2 25.9 8.1 28.6 4.6 3.7

Source: https://kti.fi/wp-content/uploads/The-Finnish-Property-Market-2016.pdf

Analysis of the ownership structure of rent in Finland in 2015 showed that most of them areprivate investors – 36% and municipalities – 29%.

Table 13. Ownership structure of rental apartments in Finland (total 824,000 rental apartments), 2015

2015 Professionalinvestors (non-subsidized)

Households/privateinvestors (non-subsidized)

Subsidized/municipalities Subsidized/otherowner

% 17 36 29 19

quality 139,000 295,000 237,000 153,000

Source: https://kti.fi/wp-content/uploads/The-Finnish-Property-Market-2016.pdf

4.3. Analysis of the structure and dynamics of property marketdevelopment in the Russian FederationIn accordance with the Strategy for the Development of Housing Mortgage Lending in theRussian Federation until 2020, the main areas are:• development of the primary mortgage lending market;• implementation of special mortgage programs for socially priority categories of citizens;• provision of long-term resources for financing of the mortgage lending market;• unification and standardization of the mortgage lending market, development of the marketinfrastructure;• development of mechanisms for crediting commercial developers for housing construction,crediting of individual housing construction and housing non-profit associations of citizens,financing of the construction (acquisition) of engineering infrastructure facilities, crediting forconstruction or acquisition of rented houses.Currently, the number of credit organizations in Russia is 623, of which 506 provide mortgageloans. At the same time, most of these organizations (more than 50%) are located in theCentral Federal District.

Table 14. The number of credit organizations – participants in the housing (mortgage) lending market (regional section) in the Russian

Federation as of January 1, 2017

Total Number ofcreditorganizationsprovidinghousingloans

Providingmortgagehousingloans

Providingmortgagehousingloans,issued onsecurity ofthe rights of

Acquiringrights formortgagehousingloans

Implementingon-lending ofpreviouslyissuedmortgagehousing loans

Attractingrefinancingin thesecondarymortgagemarket

claimsunderagreementsforparticipationin equityconstruction

RussianFederation

623 506 484 210 128 41 93

CentralFederalDistrict

358 268 1 107 69 34 52

NorthwesternFederalDistrict

49 42 41 18 11 1 6

SouthernFederalDistrict

38 37 36 12 5 2 2

NorthCaucasianFederalDistrict

17 8 4 2 0 0 0

Volga FederalDistrict

77 75 75 39 24 2 22

Ural FederalDistrict

29 29 28 14 8 1 1

SiberianFederalDistrict

37 31 31 13 7 1 7

Far EasternFederalDistrict

18 16 15 5 4 0 3

Source: https://www.cbr.ru/statistics/UDStat.aspx?Month=01&Year=2017&TblID=3-2

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Figure 6. The number of operating credit organizations in the Russian Federation in terms of federal districts in 2017 (the total number of 623 units)

Source: https://www.cbr.ru/statistics/UDStat.aspx?Month=01&Year=2017&TblID=3-2

5. ConclusionThe property market plays an important role in the development of the country's economy andaffects the volume of GDP, which causes the need to stimulate its development. Thedevelopment of the residential property market is of special social significance for the country’spopulation as well as the level and quality of living standards. The development of theresidential property market requires the expansion of the possibilities of housing financing withthe support of state, development institutions and organizations. The most importantinfluencing factors also include the size of the average weighted mortgage rate and the percapita income of the population. In turn, these factors depend on other social and economicindicators, the state of the monetary market, the financial system, the country's budgetsystem, economic growth and political situation in the country and at the international level. Tofurther stimulate the development of the property market, it is necessary to gradually reducemortgage rates, expand subsidies, as well as elaborate various tools for the development ofhousing construction and social mortgage.

AcknowledgementThe writing of this paper was supported by Plekhanov Russian University of Economics.

Bibliographic referencesBoyd, T. (2014). Property market analysis. The key to looking forward. PRRES. Retrieved from:http://www.prres.net/papers/Boyd_Property_Market_Analysis.pdfFinnish property market report (2016). The Finnish property market. Published by KTI Finland.Retrieved from: https://kti.fi/wp-content/uploads/The-Finnish-Property-Market-2016.pdfHornstein, A. (2009). Problems for a fundamental theory on house price. Economic Quarterly,95(1), 1-24.Lin, R. F.-Y. (2012). A comparative framework for commercial and residential markets. BartlettSchool of Graduate Studies, University College London (UCL).Official statistics (2017). Labor market, employment and wages. Efficiency of the Russianeconomy. Retrieved from:

http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/wages/Poorvu, W.J. (2003). Financial analysis of real property investments. Harvard Business School.Reed, R. & Wu, H. (2010). Understanding property cycles in a residential market. Propertymanagement, 28(1), 33-46.Report of UK (2016). Property Data Report 2016. Facts and figures about the UK commercialproperty industry to year-end 2015. A publication by the Property Industry Alliance. Retrievedfrom: http://www.bpf.org.uk/sites/default/files/resources/PIA-Property-Report-2016-final-for-web.pdf

1. Candidate of Economical Sciences, Associate Professor, Department of Financial Management, Plekhanov RussianUniversity of Economics, Moscow, Russian Federation. Email: sensusveris11@gmail.com2. Associate Professor, Department of Financial Management, Plekhanov Russian University of Economics, Moscow,Russian Federation

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